Principles of Microeconomics Solved
Exam Questions
Course Introduction
Principles of Microeconomics introduces students to the fundamental concepts and analytical tools used to understand how individuals, households, and firms make decisions regarding the allocation of scarce resources. The course covers the basics of supply and demand, market equilibrium, elasticity, consumer and producer surplus, various market structures, and the role of government intervention. Students will develop a foundation for analyzing real-world economic issues, interpret how incentives shape behavior, and evaluate outcomes in different market environments.
Recommended Textbook Microeconomics 5th Edition by Glenn Hubbard
Available Study Resources on Quizplus
18 Chapters
4688 Verified Questions
4688 Flashcards
Source URL: https://quizplus.com/study-set/3774
2
Chapter 1: Economics: Foundations and Models
Available Study Resources on Quizplus for this Chatper
233 Verified Questions
233 Flashcards
Source URL: https://quizplus.com/quiz/75290
Sample Questions
Q1) If a straight line passes through the point x = 14 and y = 3 and also through the point x = 4 and y = 10,the slope of this line is
A) negative 11 divided by 6.
B) seven tenths.
C) negative seven tenths.
D) 6 divided by 11.
Answer: C
Q2) Marginal benefit refers to the additional benefit that your activity provides to you.
A)True
B)False
Answer: True
Q3) The sales revenue a seller receives from the sale of an additional unit of goods is called the marginal benefit.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter
Available Study Resources on Quizplus for this Chatper
259 Verified Questions
259 Flashcards
Source URL: https://quizplus.com/quiz/75280
Sample Questions
Q1) Refer to Figure 2-10.What is the opportunity cost of producing one gallon of milk in Bora Bora?
A) 2/3 gallon of honey
B) 0.8 gallon of honey
C) 1.125 gallons of honey
D) 1.5 gallons of honey
Answer: D
Q2) How does Adam Smith's idea of the "invisible hand" apply to the various parts,made by many different manufacturers in many different countries,that are used by Apple to produce an iPad?
Answer: Smith used the "invisible hand" reference to explain why markets provide consumers with desired products and services.In the case of the iPad,the invisible hand of the market has led these parts manufacturers to contribute their knowledge and resources to the process that ultimately results in a product available for sale in the United States and around the world.
Q3) What is a circular flow diagram and what does it demonstrate?
Answer: A circular flow diagram is a model that illustrates how participants in markets are linked.It shows who supplies and purchases factors of production and who supplies and purchases goods and services.
Page 4
To view all questions and flashcards with answers, click on the resource link above.
Chapter 3: Where Prices Come From: the Interaction of
Demand and Supply
Available Study Resources on Quizplus for this Chatper
242 Verified Questions
242 Flashcards
Source URL: https://quizplus.com/quiz/75279
Sample Questions
Q1) Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?
A) a decrease in demand and an increase in supply
B) an increase in supply
C) an increase in supply and an increase in demand greater than the increase in supply
D) a decrease in demand and a decrease in supply
Answer: B
Q2) Last year,the Pottery Palace supplied 8,000 ceramic pots at $40 each.This year,the company supplied the same quantity of ceramic pots at $55 each.Based on this evidence,The Pottery Palace has experienced
A) a decrease in supply.
B) an increase in supply.
C) an increase in the quantity supplied.
D) a decrease in the quantity supplied.
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Economic Efficiency, government Price Setting, and Taxes
Available Study Resources on Quizplus for this Chatper
208 Verified Questions
208 Flashcards
Source URL: https://quizplus.com/quiz/75278
Sample Questions
Q1) Refer to Figure 4-5.What is the value of the deadweight loss after the imposition of the ceiling?
A) $50,000
B) $125,000
C) $175,000
D) $260,000
Q2) Refer to Table 4-6.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of consumer surplus?
A) $100 thousand
B) $200 thousand
C) $600 thousand
D) $800 thousand
Q3) The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called
A) producer surplus.
B) the substitution effect.
C) the income effect.
D) consumer surplus.
6
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Externalities, environmental Policy, and Public Goods
Available Study Resources on Quizplus for this Chatper
267 Verified Questions
267 Flashcards
Source URL: https://quizplus.com/quiz/75277
Sample Questions
Q1) If the marginal benefit of reducing emissions of some air pollutant is greater than the marginal cost
A) further reductions will make society better off.
B) the marginal benefit will rise and the marginal cost will fall as further reductions are made.
C) economic efficiency will be achieved when emissions are reduced to zero.
D) private businesses, rather the consumers, should be made to pay for the cost of further reductions.
Q2) Overuse of a common resource may be avoided by all of the following methods except
A) charging for the use of a common resource.
B) issuing tradable permits for the use of a common resource.
C) government taking over ownership of all private common resources.
D) setting quotas or legal limits on the quantity consumed of the common resource.
Q3) Refer to Figure 5-4.What does S<sub>2</sub> represent?
A) the market supply curve that reflects social cost
B) the market supply curve that reflect private cost
C) the market supply curve that reflects external cost
D) the market supply curve that reflects social benefit
Page 7
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Elasticity: The Responsiveness of Demand and Supply
Available Study Resources on Quizplus for this Chatper
295 Verified Questions
295 Flashcards
Source URL: https://quizplus.com/quiz/75276
Sample Questions
Q1) Which of the following statements is true?
A) In general, if a product has few substitutes it will have an elastic demand.
B) The more time that passes the more inelastic the demand for a product becomes.
C) The demand curve for a necessity is more elastic than the demand curve for a luxury.
D) The more narrowly we define a market, the more elastic the demand for a product will be.
Q2) Economists use the concept of ________ to measure how one economic variable,such as quantity,responds to a change in another economic variable,such as price.
A) slope
B) efficiency
C) relativity
D) elasticity
Q3) Refer to Figure 6-5.The section of the demand curve labeled "A" represents
A) the inelastic section of the demand curve.
B) the unit-elastic section of the demand curve.
C) the elastic section of the demand curve.
D) the perfectly elastic section of the demand curve.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: The Economics of Health Care
Available Study Resources on Quizplus for this Chatper
169 Verified Questions
169 Flashcards
Source URL: https://quizplus.com/quiz/75275
Sample Questions
Q1) The health care system in Japan is referred to as ________,under which every resident of Japan is required to enroll in either a private or the government-provided health insurance program.
A) an out-of-pocket system
B) a single-payer health care system
C) a universal health insurance system
D) socialized medicine
Q2) What is the principal-agent problem?
A) It is a problem caused by a person (principal) who hires an agent to act on his behalf but is unwilling to delegate authority to the agent to carry out the task in the best possible way.
B) It is a problem caused by agents pursuing their own interests rather than the interests of the principals who hired them.
C) It is a problem of the power system of boss and subordinate where the boss (principal) exerts influence over his subordinates (agents) using punishment or threat.
D) It is a problem that exists when a person (principal) has more information about the task than the agent he hires to perform the task.
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Firms, the Stock Market, and Corporate Governance
Available Study Resources on Quizplus for this Chatper
278 Verified Questions
278 Flashcards
Source URL: https://quizplus.com/quiz/75274
Sample Questions
Q1) A corporation is
A) the easiest type of business to set up.
B) the least expensive type of business to set up.
C) the most difficult type of business to set up.
D) the least profitable type of business to set up.
Q2) What happens in the secondary market?
A) secondary inputs like electricity are sold
B) a corporate financial manager will raise funds for expansion of the firm
C) newly issued claims are sold by the borrowing firm to the initial buyer
D) already issued claims are sold from one investor to another
Q3) How has organizing a successful firm in a market economy changed over the last century?
A) It has become easier as more and more firms discover how to do it.
B) As government intervention has decreased, firms now have more freedom.
C) There has been no change one way or the other over the last century.
D) It has become more difficult to organize an efficient and successful firm.
Q4) Define a sole proprietorship.
Q5) Explain the relationships between a corporation's shareholders,its board of directors,and its top managers.
Q6) How does a firm raise external funds through direct finance? Page 10
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 9: Comparative Advantage and the Gains From International Trade
Available Study Resources on Quizplus for this Chatper
189 Verified Questions
189 Flashcards
Source URL: https://quizplus.com/quiz/75273
Sample Questions
Q1) Refer to Figure 9-1.Suppose the government allows imports of leather footwear into the United States.The market price falls to $18.What is the value of consumer surplus?
A) $0
B) $270
C) $305
D) $320.
Q2) NAFTA refers to a 1994 agreement that eliminated most tariffs among which countries?
A) Canada, the United Kingdom and Mexico
B) the United States, the United Kingdom and Mexico
C) the United States, Canada and Mexico
D) the United States, Mexico and Cuba
Q3) In the 1930s,the United States charged an average tariff rate ________.Today,the rate is ________.
A) of 100 percent; 20 percent
B) above 50 percent; less than 1.5 percent
C) of less than 10 percent; over 40 percent
D) of 17 percent; 33 percent
Q4) Distinguish between a voluntary export restraint and a quota.
Page 12
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Consumer Choice and Behavioral Economics
Available Study Resources on Quizplus for this Chatper
302 Verified Questions
302 Flashcards
Source URL: https://quizplus.com/quiz/75289
Sample Questions
Q1) Refer to Table 10-6.What is Jay's optimal consumption bundle?
A) 1 burger and 2 Pepsis
B) 2 burgers and 3 Pepsis
C) 3 burgers and 1 Pepsi
D) 3 burgers and 2 Pepsis
Q2) The slope of the indifference curve is referred to as
A) the marginal rate of substitution.
B) the price ratio.
C) the marginal rate of consumption.
D) the marginal tradeoff rate.
Q3) In explaining consumer behavior economists explain how consumer tastes and preferences are formed.
A)True
B)False
Q4) Consumers have to make tradeoffs in deciding what to consume because
A) not all goods give them the same amount of satisfaction.
B) the prices of goods vary.
C) they are limited by a budget constraint.
D) there are not enough of all goods produced.
Q5) Explain the endowment effect.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 11: Technology, production, and Costs
Available Study Resources on Quizplus for this Chatper
330 Verified Questions
330 Flashcards
Source URL: https://quizplus.com/quiz/75288
Sample Questions
Q1) When the marginal product of labor rises
A) the marginal cost of production will exceed the average total cost.
B) the marginal cost of production also rises.
C) the marginal cost of production falls.
D) the average total cost of production also rises.
Q2) Refer to Figure 11-2.Diminishing returns to labor set in
A) after L<sub>1</sub>.
B) after L<sub>2</sub>.
C) after L<sub>3</sub>.
D) immediately.
Q3) Refer to Figure 11-15.What is the combination of inputs that produces 200 gooseberry pies at the lowest cost?
A) combination e: 10 hours of labor and 48 units of capital
B) combination f: 40 hours of labor and 24 units of capital
C) combination g: 60 hours of labor and 14 units of capital
D) combination h: 60 hours of labor and 9 units of capital
Q4) If average product is decreasing,then marginal product must be negative.
A)True
B)False
Q5) State the law of diminishing marginal returns.
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: Firms in Perfectly Competitive Markets
Available Study Resources on Quizplus for this Chatper
298 Verified Questions
298 Flashcards
Source URL: https://quizplus.com/quiz/75287
Sample Questions
Q1) For a given quantity,the total profit of a perfectly competitive firm is equal to the vertical distance between the firm's total revenue curve and its total cost curve.
A)True
B)False
Q2) Refer to Table 12-2.What is Margie's total revenue if she sells 250 pounds of apples?
A) $250
B) $500
C) $750
D) There is not enough information in the table to determine Margie's total revenue.
Q3) If productive efficiency characterizes a market
A) the marginal cost of production is minimized.
B) firms produce the goods that consumers desire most.
C) the output is being produced at the lowest possible cost.
D) firms use the best technology available to produce the good.
Q4) Under what conditions should a competitive firm shut down in the short run?
Q5) What is a long-run supply curve? What does a long-run supply curve look like on a perfectly competitive market graph?
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 13: Monopolistic Competition: the Competitive
Model in a More Realistic Setting
Available Study Resources on Quizplus for this Chatper
278 Verified Questions
278 Flashcards
Source URL: https://quizplus.com/quiz/75286
Sample Questions
Q1) Refer to Table 13-3.What is the amount of the firm's loss at its optimal output level?
A) $0
B) $41
C) $45
D) $50
Q2) Does the fact that monopolistically competitive firms do not achieve productive efficiency or allocative efficiency mean that there is a significant loss in consumer welfare?
Q3) What is the difference between zero accounting profit and zero economic profit?
Q4) Monopolistically competitive firms can differentiate their products
A) by producing at minimum efficient scale.
B) by producing where marginal revenue equals marginal cost.
C) by equating price and average total cost.
D) through marketing.
Q5) For productive efficiency to hold
A) price must equal the marginal cost of the last unit produced.
B) price must equal marginal revenue of the last unit sold.
C) average variable cost is minimized in production.
D) average total cost is minimized in production.
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 14: Oligopoly: Firms in Less Competitive Markets
Available Study Resources on Quizplus for this Chatper
262 Verified Questions
262 Flashcards
Source URL: https://quizplus.com/quiz/75285
Sample Questions
Q1) Refer to Figure 14-4.What is the equilibrium outcome in this game and is this a subgame-perfect equilibrium?
A) In the equilibrium, neither offer is accepted as Rainbow Writer holds out for a better deal. The two rejection outcomes are subgame-perfect equilibria.
B) In the equilibrium, Odeon offers $40 per copy of the software package and is accepted but this is not a subgame-perfect equilibrium.
C) Either offer of $30 or $40 per copy of the software package is accepted and these two equilibria are subgame-perfect equilibria.
D) Either offer of $30 or $40 per copy of the software package is accepted but these are not are subgame-perfect equilibria.
Q2) A set of actions that a firm takes to achieve a goal is the definition of a A) business plan.
B) business strategy.
C) business prospectus.
D) business goal.
Q3) What is meant by the term "government-imposed barrier to entry"? Why would a government be willing to impose barriers to entering an industry?
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 15: Monopoly and Antitrust Policy
Available Study Resources on Quizplus for this Chatper
271 Verified Questions
271 Flashcards
Source URL: https://quizplus.com/quiz/75284
Sample Questions
Q1) How do the price and quantity of a monopoly compare to that of a perfectly competitive industry?
Q2) In 1935,the U.S.Patent and Trademark Office issued Parker Brothers a trademark on the use of the name Monopoly for a board game.Hasbro bought Parker Brothers in 1991.Which of the following statements is true regarding the trademark on the name Monopoly for a board game?
A) The original trademark expired well before Hasbro bought Parker Brothers, so they never had a trademark on Monopoly.
B) Trademarks never expire, so Hasbro continues to have a trademark on the name Monopoly.
C) The trademark expired in 2011, 20 years after Hasbro's purchase of Parker Brothers.
D) The trademark expired in 1955, 20 years after the trademark was issued to Parker Brothers.
Q3) What is a monopoly? Can a firm be a monopoly if close substitutes for its product exists?
Q4) What gives rise to a natural monopoly? How do consumers benefit from a natural monopoly?
Q5) Provide two examples of a government barrier to entry.
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 16: Pricing Strategy
Available Study Resources on Quizplus for this Chatper
263 Verified Questions
263 Flashcards
Source URL: https://quizplus.com/quiz/75283
Sample Questions
Q1) Refer to Figure 16-5.Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that such that it charges a fixed fee and a per-unit price equal to the competitive price.(This is also called an optimal two-part tariff.)What is the quantity it should produce?
A) 240 units
B) 320 units
C) 480 units
D) 560 units
Q2) Firms engage in odd pricing when they charge prices that appear to be less than they really are; for example,charging a price of $4.95 instead of $5.00 and $.99 instead of $1.00.How have researchers tried to determine whether odd pricing is successful in convincing consumers that odd prices are less than they really are?
Q3) If marginal cost is zero,with an optimal two-part tariff
A) total revenue is maximized.
B) consumers maximize their surplus
C) the firm does not have to charge a fixed-fee portion.
D) firms may not maximize profit.
Q4) Under what circumstances will the law of one price hold,and when might it not hold?
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 17: The Markets for Labor and Other Factors of Production
Available Study Resources on Quizplus for this Chatper
286 Verified Questions
286 Flashcards
Source URL: https://quizplus.com/quiz/75282
Sample Questions
Q1) An organization of employees that has the legal right to bargain with employers about wages and working conditions is called a
A) closed shop.
B) guild.
C) labor union.
D) monopsony.
Q2) The demand curve for labor is also
A) the demand curve for the output produced with labor since the demand for labor is a derived demand.
B) the marginal product of labor curve.
C) the marginal revenue product of labor curve.
D) the supply curve for the output labor is used to produce.
Q3) What is the signaling hypothesis of education?
Q4) Refer to Table 17-7.Dante owns a pencil factory and faces the situation shown in the table and the cost of renting a machine is $240 per week.
a.Fill in the blanks in the table and determine the profit-maximizing number of machines for Dante to rent.Explain why renting this number of machines is profit maximizing.
b.Draw Dante's demand curve for capital.
Page 20
To view all questions and flashcards with answers, click on the resource link above.
Chapter 18: Public Choice,taxes,and the Distribution of Income
Available Study Resources on Quizplus for this Chatper
258 Verified Questions
258 Flashcards
Source URL: https://quizplus.com/quiz/75281
Sample Questions
Q1) If the marginal tax rate is less than the average tax rate as taxable income increases,the tax structure is
A) regressive.
B) proportional.
C) progressive.
D) unfair.
Q2) If the marginal tax rate is equal to the average tax rate as taxable income increases,the tax structure is
A) regressive.
B) proportional.
C) progressive.
D) unfair.
Q3) If,as your taxable income decreases,you pay a smaller percentage of your taxable income in taxes,then the tax is A) regressive.
B) proportional.
C) progressive.
D) unfair.
Q4) What is the relationship between market failure and government failure?
To view all questions and flashcards with answers, click on the resource link above. Page 21